Silver (XAG/USD) remains subdued, struggling to sustain momentum as it trades below the critical $38.00 level. The precious metal, traditionally a safe-haven asset, is under pressure due to improving market sentiment, driven by expectations surrounding a potential resolution of the Ukraine-Russia conflict.
Safe-Haven Demand Dips as Geopolitical Tensions Ease
Silver, which is often sought after during times of geopolitical uncertainty, faces difficulties as the market sentiment improves following a significant development in the ongoing Ukraine-Russia crisis. US President Donald Trump and Ukrainian President Volodymyr Zelenskyy held a pivotal meeting, expressing hope that their talks would set the stage for a trilateral summit with Russian President Vladimir Putin. The meeting, which included key European leaders, raised optimism that discussions could pave the way for peace talks, which would alleviate market concerns and diminish the demand for safe-haven assets like silver.
Trump confirmed that he had initiated preparations for a trilateral meeting between the three leaders. While this has yet to be officially confirmed by the Kremlin, the potential for a de-escalation of the conflict has resulted in lower risk aversion, contributing to the overall softness in silver prices.
US Data and Fed Policy Outlook Support Silver’s Underperformance
Despite the positive geopolitical developments, silver is seeing limited upward movement due to the continued dovish tone surrounding the US Federal Reserve’s monetary policy outlook. Recent US economic data has reaffirmed expectations that the Fed could proceed with its rate-cutting cycle, maintaining pressure on the US dollar and favoring non-yielding assets like silver.
However, with the weakening demand for safe-haven assets and a subdued outlook for silver’s upside, the metal is now facing resistance at the $38.00 mark. Investors will closely monitor any additional developments surrounding the Russia-Ukraine peace process and the US Federal Reserve’s stance on interest rates to determine silver’s next move.
Technical Levels and Price Action for XAG/USD
- Resistance: The immediate resistance lies at the $38.00 level, with additional hurdles at $38.50 and $39.00. A strong breakthrough above these levels could pave the way for further upward movement.
- Support: On the downside, support is found around $37.50, with further downside potential toward the $36.80 level if the metal fails to hold its ground above key support levels.
The technical outlook for silver remains cautious, with further weakening in safe-haven demand likely to keep silver trapped below the $38.00 mark unless there is a significant shift in geopolitical or economic conditions. Investors should remain cautious ahead of further developments related to the Ukraine-Russia conflict and upcoming US data.
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